Local currency deal of the quarter century: América Móvil

Sep 1, 2013

Títulos de Crédito Extranjero,
2012

América Móvil’s global 15 billion
Mexican peso ($1.2 billion) bond in November 2012
introduced a new structure, drawing domestic and foreign
investors into local currency notes. The structure mimics the
seamless capability of the Mexican sovereign’s
bonds to create liquid benchmarks with both local and global
buyers without the need for separate bonds or global depository
notes. One issuer, one curve. Many local-currency sales have
pushed envelopes in the international area in terms of size and
tenor in the last 15 years. However, this innovation could
change the game for the growing class of blue chip LatAm
borrowers accessing global pools of liquidity. The 2022 senior
unsecured bond, known as Títulos de Crédito
Extranjeros, are Securities and Exchange Commission (SEC)
and Comisión Nacional Bancaria y de Valores (CNBV)
registered, denominated and settled in pesos. They trade on a
fungible basis in the international markets and Mexico.

The títulos attracted more than 50 billion
pesos in demand, with 80% coming from foreign
investors and 20% from LatAm, largely allocated to Mexico
accounts.

The dual-registration was important: registering the bonds
only in Mexico would have stopped some international investors
buying such bonds, while selling them in the US, even in
pesos, would have left many Mexican investors unable
to buy or trade the bonds, says Carlos García Moreno,
the telco’s chief financial officer.

"The banking commission in Mexico basically changed their
requirement such that if we already had certain securities
listed, say in the US, the very same securities could be listed
in Mexico," he says.

Already the structure has found followers:
Mexico’s Televisa used the format for its own
issue in May. América Móvil, meanwhile, expects
to reinstate quarterly re-openings of the
títulos after skipping the second quarter of
2013.

"The notion is to reopen the títulos every quarter
which was meant to give investors a sense of liquidity, but
with broad moves in rates the last thing investors want to hear
about is new supply," says García Moreno.
LF

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